Cap and Trade: New global warming taxation

Environmentalists and their allies in Congress are already conceding defeat on the Lieberman-Warner global warming legislation that will be debated this week in the Senate. The Washington Post reports that “even supporters of the complex, extensively negotiated 494-page bill say that there is little chance that it will win Senate approval.” Sen. Byron Dorgan (D-N.D.) told the Post: “In some ways, this is a dress rehearsal for next year.” Dorgan is correct. Because all three remaining presidential candidates support plans similar to Lieberman-Warner, this issue will be back in 2009. But that does not mean the Senate debate is irrelevant. It gives conservatives an invaluable opportunity to establish some truths about the Lieberman-Warner’s “cap-and-trade” policy.

“Cap and Trade” Is Really Just a Massive Tax Increase: One of the biggest accomplishments of environmental activists has been to sell “cap-and-trade” policies as a “free market” solution to global warming. Hence the New York Times can report with a straight face that Lieberman-Warner would create “one of the biggest markets in the world, estimated to be worth over $200 billion a year.” This makes it seem like Congress can, by the stroke of a pen, create $200 billion in new wealth for the American economy every year. Nothing could be further from the truth.

Lieberman-Warner sets an arbitrary “cap” on total emissions the U.S. economy can produce and then auctions off (or gives away) “allowances” to businesses. In order to pay for these allowances, businesses would be forced to raise prices on consumers. The Congressional Budget Office estimates that just a 15% cut in emissions would raise average household energy cots by almost $1,300 a year. So when the Times says a $200-billion-a-year market will be created, what is actually happening is that Congress is raising taxes on the American people by $200 billion a year.

“Cap and Trade” Is Government Control of the Economy: So what does Congress plan to do with the extra $200 billion a year? Will it pay down the deficit? Fix Social Security? Not a chance. Being the natural-born spenders that they are, lawmakers have already divvied up that money — Sen. Barbara Boxer (D-Calif.) estimates her tax increase will raise $3.32 trillion by 2050 — among their favorite constituents. Liberals need votes from farm states so pecan growers in Georgia and wheat growers in Montana will get credits they can sell to businesses. Indian tribes who give campaign cash to liberals also are slated to get money as are lobsters in Sen. John Kerry’s Massachusetts. Steel and cement companies are set to receive $213 billion, utilities get $307 billion and oil companies get $34 billion.

The rest of the money goes to the Climate Change Credit Corp., a quasi-government entity that would operate outside the normal budgeting process. This five-member group would dole out trillions to anybody it wants under such vague guidelines as “relief” for low-income taxpayers, training for “green collar” jobs and “wildlife adaptation.” Worse, this new $200-billion-a-year “market” would need oversight, so the bill also creates a Carbon Market Efficiency Board that would have to regulate 85% of the entire U.S. economy.

“Cap and Trade” Does Not Help the Environment: And what does the American taxpayer get for all these massive tax increases and new regulation? If the bill works perfectly, its supporters claim it will reduce U.S. greenhouse gas emissions by 70% by 2050. First, there is no reason to think it will work at all. Europe instituted a similar policy in 2005, and so far it has been a complete disaster, raising energy prices on consumers while also failing to reduce emissions. Second, a 70% reduction in U.S. emissions by 2050 will do nothing to slow climate change thanks to the length of time it takes current emissions to dissipate and the fact that China and India will do nothing to reduce their emissions at the cost of their economic growth.

“Cap and Trade” Is a Jobs Killer: Proponents of capping carbon often claim the policy will create millions of new jobs. But if the policy is so great for an economy, then why aren’t China and India busy capping their carbon emissions? Because capping carbon means capping energy usage — and energy is needed for all economies. If carbon coal sequestration continues to be difficult to develop, then Lieberman-Warner will cost the U.S. economy $4.8 trillion and close to 1 million jobs by 2030.

Quick Hits:

* A National Center for Public Policy Research poll shows that 65% of Americans reject spending even a penny more for gasoline in an effort to reduce greenhouse gas emissions. * Actually enforcing the law at the U.S. border, instead of catching and releasing illegal border crossers, has reduced border apprehensions by 20%. * The Washington Post admits that Iraqi “government and army may be winning the war.” * The Association of European Chambers of Commerce released a study showing that Europe’s invasive labor regulations have stuck Europe with an overall employment rate the U.S. attained by 1978. * The Tax Foundation released a study showing that Virginia, Colorado and New Hampshire are among the top 10 states hit hardest by Sen. Barack Obama’s promise to raise Social Security taxes.